HNO and HON, Horizons long natgas/short oil or visa versa

Hamilton

HNO March 26, 2010 HON March 26 , 2010

With the expectation that oil would come off the $88 or so level and natural gas would hardly budge this new product would be a great tool to play the game with a single trade , just make sure you buy the one intended, in this case HNO. I have no idea where oil will go next but after a $20 drop some rebound is not unlikely so I would exit the trade.

Fundamentally the trade  (is this a contradiction in terms?) to do is , of course , to buy the HNO and not the HON. The reason being is that the shale gas phenomenon has had a disruptive effect on the (always local) price of natural gas. This is not, according to the experts, a sustainable situation, in fact , it may be very short-lived as the shale gas depletion rate is extraordinary high. Oil ,on the other hand , is never priced locally (with a few exceptions like Venezuela, and some of the Arab states) and is destined only to go up if one believes the ex-chief economist with one of our banks. Ergo , over time, HNO should  go up as the ratio between the two energy sources gets back to a more logical thermal equivalent.

For the moment we are out and just keeping an eye on this.

SC, Shoppers once again!

Hamilton

There are not many stocks that allow for a bullish outlook; this one does so it is worth repeating particularly since there were a number of commentators on BNN who were downright bearish on the stock which is already down about 40% from the highs.

SC March 26, 2010

The stock is down a few dollars since the previous comment but the overall picture remains quite constructive. The stock should not drop much below $34, if that. Just closing the gap would retrace it to about $42, up about 23 %. Of course higher levels are quite possible as shown. The only part that cautions against an overly aggressive position would be the market overall which could become very bearish.

TSE, March 26, 2010

Hamilton

Obviously not a triangle!

TSE March 26 2010 DJIA March 26 2010

The TSE did not follow the expected script, so the triangle is definitely out, also we have now retraced a respectable 50% on the TSE and are overlapping previous downlegs which could mean that the entire thing is over ending a very simple a-b-c down flat correction.However it is not entirely clear how this would fit the bigger picture. Looking at the DOW for comparison purposes this is not yet the case and a variety of bearish scenarios are still valid. One thing is clear and that is that the TSE is more volatile than even the DOW

   It might help to also look at the Canadian dollar (against the US). A few weeks ago everybody and their brother and uncle simple knew that the Can. $ would go up and could reach 1.10 or even 1.20 easily. The obvious part , at the time, was that it was a very crowded trade and therefore did not work, in fact the dollar lost 7+ cents in an equal number of days,  pretty well repeating what it had done a week or so earlier. Here is the chart.

Can Dollar , March 26, 2010

Notice that this too (for the moment) looks like a simple flat correction a-b-c with a 3-3-5 structure. Again it is a little difficult to fit this in the bigger picture!, so the situation is that we remain bearish but with a little more caution.

TSE update

Hamilton

TSE May 24 2010

Due to the holiday in Canada the chart skips a day so the anticipated 4th wave triangle is a little harder to discern. Anyway, for the moment it looks like today’s 250 or so point decline at the open , followed be an almost flat close for the day is wave c of the triangle, d and e still to follow. After that wave 5 should take the TSE to about 11000 or so and that MIGHT then conclude this specific leg. however it is not clear at all what the exact degree of this wave is , other than that it is not a bottom!